Merrill's Cohen concerned about Q3 local TV

DavidB. Wilkerson

Merrill Lynch's Jessica Reif Cohen expressed concern on Wednesday that lofty expectations for local television advertising sales in the second half of the year may be overstated. In a research note, the influential analyst noted that station groups are reporting that second quarter ad sales are down as much as 2-4 percent from year-earlier figures, a steeper decline than she had predicted. Taking her cue from Young Broadcasting's second-quarter warning (see below), Cohen said "a number of pure-play TV station groups may be candidates for downward revisions in near-term earnings," including Sinclair
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(also see below), Hearst-Argyle
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and Belo
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Cohen also said a downbeat May revenue report from Scripps issued earlier Wednesday could indicate trouble for ABC's owned-and-operated station group.

"Given the lethargic state of local TV station advertising," Cohen said, "we believe there is a growing likelihood that our [third-quarter] estimates may be too optimistic." Many station groups have expressed hope that increased Internet, pharmaceutical, millenium-related and early political spending would lead to a strong second half. But Cohen pointed out that "cable and radio are continuing to take share from television stations." She added that if the current trend continues, estimates for 2000 may have to be ratcheted down, as well.

Among the few station groups Cohen isn't worried about are those of Spanish-language giant Univision
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the Time Warner
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-owned WB, Fox
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and CBS
"

Young sees second-quarter shortfall

Young Broadcasting's shares fell Wednesday after the television station owner warned weakness in advertising sales will drag second-quarter cash flow results below Wall Street estimates. Young
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which owns 12 stations, said broadcast cash flow results would drop 10 percent from year-ago totals. Analysts polled by First Call were expecting an after-tax cash flow figure of $1.53 per share for the June period. See full story.

Scripps May revenue rises almost 6 %

E.W. Scripps Co. said Wednesday that May revenue from continuing operations rose 5.9 percent from the same month a year ago, to $136 million. The newspaper publisher and broadcaster
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said newspaper advertising revenue from operations jumped 6.7 percent to $62.5 million, reflecting a 2.5-percent increase in classified ads and a 2.4 percent jump in local ads. See full story.

Sinclair mulls spinoff or sale of radio group

Sinclair Broadcast Group shares rose Wednesday on news that it's considering a spinoff or sale of its radio assets, which include more than 50 stations. Sinclair, which also owns 57 television stations, said after the market closed on Tuesday that it would seek to raise about $175 million to $200 million if it decides to try an IPO, and would use the proceeds to pay down debt. The stock
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rose 5/8 to 16 1/4 on above-average volume of 2.15 million shares. Shares are still well off the52-week high of 30 1/8, set last July 2; the stock has rebounded from its 12-month low of 6 3/4, set Oct. 8. See full story.

NBC said on Wednesday it'll make an equity investment in Tivo, the maker of a digital set-top box that allows viewers to record up to 30 hours of programming without videotape. Financial terms weren't disclosed. Several of the networks have tinkered with ways of so-called "time-shifting" of their programming to allow viewers to see their shows whenever they want to, and still generate revenue from such non-traditional viewing patterns. See full story.

Cox invests $45 million in MP3.com

Cox Interactive Media has invested $45 million in online music provider MP3.com as part of deal to collaborate on the creation and operation of several music-related Web sites, Cox and MP3 said Wednesday. The companies said they'll make "approximately equal financial contributions" to the new joint venture, and will make unspecified advertising and e-commerce revenue-sharing agreements. See full story.

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